jim jubak just added GRP to his portfolio saying their earning will accelerate. NBR is the biggest customer for GRP products. go figure
NBR has been saying for the past few quarters that most of their money will come from new rigs not from the day rate increase. day rate increase has been icing on the cake. Wall street increased Q3 by 20% and NBR still beat the numbers.
It is amazing to me that people selling a stock relentlessly because 2 years from now there might be a slow down. lets by tech since all of them going to make money for ever. anyway, 60% of NBR's business will come from international markets which is very stable and they said almost 50% of their rigs have contracts some as far as 2010.
OPEC stated that by 2025 world consumption of oil will double. consumption increases around 1.8% annually. considering 3 times increase in rig numbers and no increase flat production of oil in last decade, I think that will amount for a lot of rigs.
last time we had a increasing number of rigs and a real glut was 1986. after Iran & Iraq war started, oil soared and market over reacted in matter of 4 years 4500 rigs came to market and with US economic slow down and the fact that both countries involved were pumping a lot of oil and selling it in black market dirt cheap. oil prices collapsed so as rig market. that is where this Bullsh#@ originating.
today, there are 1700 rigs in the market. nobody is building one if they do not have a firm long term contract in hand. there are no trained workers whom can even run a few new rigs that are coming to the market.
It is not 1986 and US is not consuming 60% of world oil. in a few years with world globalization even US economy will not be important. Drilling is ever more difficult and with high world consumption it is not cyclical anymore.
read what he said last march when the sector was down. Investors who want to know when oil stocks will start to recover can take heart at recent developments in the global economy. It's starting to look like the world's economies will grow faster in 2006 than previously projected. The International Monetary Fund (IMF), for example, has indicated that it will raise its forecast for global growth this year to 4.8% from an already healthy 4.3%. As long as growth stays on track for the global economy, I think it's worth holding energy stocks through what looks like an extended version of the sector's traditional late-winter weakness. I'd only sell this sector if the global economy started to slow -- which would reduce demand and prices for oil and gas. Right now that doesn't look likely and, in fact, the numbers are starting to pile up on the side of stronger-than-expected growth. Stay tuned, though. We're dealing with projections here, and there's many a stumble possible before investors get to take projections to the bank. http://moneycentral.msn.com/content/P146949.asp